Kosovo is a lower-middle-income country which has experienced solid economic growth over the last decade. Kosovo is one of only four countries in Europe to experience growth in every year since the onset of the global financial crisis in 2008.
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Even if pouched in complex, quantitative studies, “risk” remains a complex, multi-dimensional, and highly subjective concept that reflects an analyst’s lack of confidence and sense of uncertainty. In this,... Show More + financial markets are not different from other sectors in the economy. Decision-making processes—especially if they relate to large-scale investments to be realised over a medium- to long-term horizon—are facilitated by an environment, in which the underlying “risk components” can be objectivised, quantified, and tracked over time. This is where functioning markets play such an important role, aggregating individual risk assessments, perceptions, and resultant actions and “translating” them into (accurate) price signals, which will help to increase the effectiveness of economic decisions made in the economy as a whole. In the financial sector, this price signal is the interest rate. Even though reported figures tend to be averages spanning over a wide range of individually relevant p Show Less -

Kosova Sot: What happens if the budget does not get approved this year?Jan-Peter Olters: There are emergency provisions in Kosovo's legislation that give the authorities a little extra time to finance... Show More + current -- but not capital -- expenditures, in function of the previous year's budget. But even this contains a number of important implications and risks. First, by having to delay public investments until a new budget will have been approved by a Parliament that was able to constitute itself will reduce overall growth rates in the economy -- beyond the amounts not spent by Government. The uncertainty alone will have the private sector delay its own decisions on large expenditures as well. Second, without the mid-year budget review for the current budget, the ability to accommodate the salary increases within existing line-item constraints risks the Government's ability to pay (all) public sector salaries by year's end and rectify any arrears situation early in 2015. If the January Show Less -

Reporter Reisen: Mr. Olters, is it correct to say that the project of a new coal-fired power plant in Kosovo has become the most controversial one within the World Bank?Jan-Peter Olters: It is at... Show More + least one that everyone knows. It is one of the most controversial.RR: The World Bank has announced to reduce investments in new coal-fired power plants. Why does Kosovo need a new coal power station?Olters: The issue is not a new, additional power station but the ability to decommission “Kosovo A” as quickly as possible and replace it with a modern power plant. “Kosovo A” is an ancient, fragile, and very inefficient power plant, which—even with the new filters—causes significant pollution.RR: Would it not be more sustainable to rely on alternatives to reduce the country’s dependency on coal energy?Olters: We did ask ourselves: are there options to close “Kosovo A” without replacing it with another coal-fired power plant, while ensuring that, at the same time, energy security is assured ( Show Less -

Koha Ditore: Since 2008, the Government of Kosovo had road construction as a priority, including here the three next years that will swallow 33% of capital investments. Has this concentration only on roads... Show More + been a mistake? Would investments in other sectors lead to more jobs and sustainable growth?Olters: Especially as a small, landlocked country, a transport network that guarantees secure access to seaports and the most important trading partners is an important priority. It still holds true that the only route to markets in central Europe, such as Germany or Switzerland, that does not cross a country that has not yet recognized Kosovo’s independence is via Albania and Italy. There is no doubt that Route 7—if well maintained—will continue to generate important economic benefits. Any discussion on whether the money spent on the motorway to Albania has maximized the development impact, relative to the same amount of money that could have been spent on alternative projects, has become pur Show Less -

Mr. Olters, let us start from an issue which has created lot of debate and suspicion in Kosovo – the problem of unemployment. KAS, supported by WB, brought the rate of unemployment to 30,9 per cent, or... Show More + 4,2 per cent less than six months ago. However the registration of population brought the unemployment rate at 44,8 per cent. How were these figures “produced” and how trusted they are? Which indicators have brought these results?Olters: For the first time in four years, the Labour Force Survey has taken a close look at labor market outcomes in Kosovo. These are the most reliable data and most accurate source for the calculation of the unemployment rate, with methods and methodologies that reflect those being employed by Eurostat and surveys that were verified by the World Bank experts. The public reaction to the findings, including the suspicions you have mentioned, relate to the conceptual distinction between the “economically inactive” segments of the population (capturing also those Show Less -

“The problem that is usually being visualized, is how capitalism administers existing structures,” Austrian-American economist Joseph Schumpeter wrote in 1942, “whereas the relevant problem is how it creates... Show More + and destroys them.” In many debates on economic development, it is often underemphasized that dynamic rates of economic growth are the result of an almost violent process, unsettling for companies and households, and a conscious and courageous choice by all who commit to it.Almost six years after independence, Kosovo finds itself at a critical juncture, at which important development priorities will need to be defined to be able to set its economy onto the right track towards vigorous growth and lasting improvements in social indicators. Given the recent performance of its economy, Kosovo is currently well-positioned to base a long-term growth strategy on the foundation of macro-fiscal and financial stability and avoid having existing fragilities (the private sector’s low productiv Show Less -

Analysts’ assessments of Kosovo’s development fluctuate between disastrous (en route to becoming worse) and resilient (with the potential of considerable growth acceleration). Available statistics help... Show More + to underpin any view on the state of the economy—starting from a youth unemployment rate of 60 percent (terrible), a trade deficit of more than 40 percent of GDP (bad), and average income of about €2,700 (unacceptable) to non-performing loans of 7½ percent of total credits (still acceptable), average real GDP growth rates during 2008–12 GDP of 4.2 percent (respectable), fiscal deficits of 1.6 percent of GDP over the same five-year period (good), public investments of 40 percent of total budgetary expenditure (very good), and a stock of public debt of less than 8.5 percent of GDP (exemplary). All figures are for 2012, unless indicated otherwise.As in any other economy, unemployment and poverty are lagging indicators. For this reason, it is not surprising that the widespread economic pessi Show Less -

What is the World Bank’s assessment on the economic trends in Kosovo?In comparison to its neighbors (and other countries in Europe), Kosovo has weathered the global financial and euro crises fairly well,... Show More + protecting the strong macro-fiscal and financial foundation of its economy. Unlike Greece or Italy, for instance, where over-indebtedness has been the root cause of the current crisis, or Iceland, Ireland, Spain, or Cyprus, where overexposed banking sectors have brought previously healthy economies to the edge of sovereign default, Kosovo has maintained low deficits and debts and a stable, liquid, and generally profitable banking sector. It has been particularly impressive that, for years, about 40 percent of public expenditures were earmarked for investments, even if the majority of related funds went to one single project. As a result, key elements necessary to pursue pro-growth policies are in place, policies that would place further improvements to the business climate and a tangib Show Less -

Assume KOSID and allied civil society organizations will “win” the energy debate, with the Kosova e Re power plant (KRPP) remaining unbuilt. Would that transform Kosovo and bring the kind of future envisioned... Show More + in, and advocated by, KOSID’s recent media campaign? With clean, secure, and affordable energy from renewable sources? Or would such a “success” end up being a Pyrrhic victory, costly for Kosovo, its economy, and its citizen? Would today’s Energy Strategy—aimed at opening doors to modern technologies and an energy mix—be sacrificed in favor of the continued reliance on Kosovo A and opportunistic investments in this sector, resulting in more rather than less coal-based power generation in years and decades to come? Possibly with power plants being built not to increase domestic energy security but with a view to simply exporting energy, with technologies that are inconsistent with requirements spelled out in the European Union’s environmental acquis communautaire, and with socio-ec Show Less -

Response to Telegrafi by Jan-Peter Olters, World Bank Country Manager for Kosovo, on the selection process for the Governor of the Central Bank of the Republic of Kosovo(February 5, 2013)As defined by... Show More + law, the recruitment process for the position of Governor has been well-defined, is open and transparent, with a clear profile being spelt out in the vacancy note. The World Bank—interested in seeing the integrity of the recruitment process being protected—believes that this will allow for the appointment of a Governor with the highest degree of personal integrity, professional experiences, and the most relevant qualifications and skills. It is thus important that, by the end of the process, all interested parties can reconstruct and understand the reasoning behind the ranking of the seven candidates being considered for this position.Përgjigje për Telegrafin, nga Jan-Peter Olters, Menaxher i Bankës Botërore për Kosovë, për procesin e zgjedhjes së Guvernatorit të Bankës Qendrore të Republ Show Less -

Towards Increased Development FinancingPublished in: The Kosovo Banker, Issue 2 (December 2012), pp. 16–17.Jan-Peter OltersCountry ManagerWorld Bank Office in KosovoAvailable in Shqip It is simple... Show More + mathematics: if Kosovo succeeded in raising growth rates from currently about 3.3 per cent to, say, 5.0 per cent, the country would reduce the time required to double national income from 21 years and 4 months to 14 years and 2 months. This is a difficult but not an impossible task, even if it means complementing the underlying growth model—presently based on remittances and public investments—with policies aimed at attracting private-sector investments at the scale required to increase overall productivity. In this endeavour, banks play a central role. Data suggest—as contained in a solid body of economic research—a strong causality between access to credit and an economy’s (productivity) growth. In the Kosovo-specific context, there are two distinct views on whether banks play a suffic Show Less -

FORUM 2015—PATHOLOGY OF A DELAYPANEL DISCUSSION, DECEMBER 17, 2012Jan-Peter OltersCountry ManagerWorld Bank Office in KosovoAvailable also in Shqip I am very grateful to Forum 2015 for its invitation... Show More + to today’s event and the authors of the Pathology of a Delay for their contribution to the energy debate in Kosovo. I have to admit, I like the study’s content a whole lot better than the—admittedly catchy—title, referring to the study of the nature, origin, progress, and cause of a disease. In fact, I’ll argue in the following that the delays, which undoubtedly occurred, were healthy and in Kosovo’s interest.There is no doubt that the definition of an energy strategy in Kosovo has taken a whole lot longer than originally expected, involving a long series of delays, some of which—with the benefit of hindsight—were probably avoidable. But many of them were the consequence of either learning or developments entirely outside of Kosovo’s control. The study presented here to Show Less -

Policy makers under pressure can get preoccupied with the fixation of the moment. For the eurozone, that idée fixe has been “the firewall”. How big is big enough? Who contributes and how?Now that the eurozone... Show More + finance ministers have exhausted themselves with a multilayered package of hundreds of billions of euros, the debate will go global at this week’s spring meetings of the International Monetary Fund and the World Bank. The next preoccupation will be how many more hundreds of billions of euros should be pledged to the IMF. It will be Firewall II: the Sequel.I beg to differ. Not with firewalls exactly, but with the preoccupation.The survival of the eurozone now depends on Italy and Spain. They are the countries that are too big to fail – or to rescue. Extraordinary action by the European Central Bank has lowered the interest rates that Italy and Spain pay on their debt, but not solved their problems.In one sense, the much-badgered Germans are right. The fates of Italy and Spain depen Show Less -

BackgroundIn December 2011, the World Bank issued a study entitled “Development and Evaluation of Power Supply Options for Kosovo: A Background Paper.” This “Options Study” reviewed a variety of previous... Show More + studies commissioned by the Government of Kosovo, the power sector entities, the World Bank, and other donors. Many of these studies considered a variety of alternatives to a new, large lignite-fuelled power plant that the Government of Kosovo is planning to build. However, a systematic, consolidated and up-to-date comparison and evaluation of the costs of energy alternatives had not yet been presented.The Options Study provides this evaluation by covering the subjects necessary to any evaluation of a power generation project:power demand forecastpower supply optionsalternative power supply development plans composed of a sequence of supply optionscomparison of the costs of meeting forecast power demand from each of the power supplydevelopment plans (incl. power plant construction and Show Less -

In palatial rooms at the Berlaymont, Brussels, EU finance ministers have been discussing how to save the Eurozone and balance growth with austerity. Across the globe in Mexico City, G-20 ministers have... Show More + been trying to save the world economy by strengthening financial systems. In New York at the General Assembly, representatives have been rallying to muster resolutions to denouce violence in the Middle East. Where in the corridors and halls of power are they talking about women's rights? The answer is easy. In side meetings, rarely ever the main event.Let's for a moment imagine a different world. It's a world where women are recognized as helping drive global growth -- today we already know that women represent 40 percent of the global labor force. A world where all women and girls have the chance to live full productive lives -- today we know that too many girls and women still die in childhood and in the reproductive ages. A world where there's equal employment opportunities, equal ear Show Less -

The Benefits of Prudence in Times of UncertaintyPublished in: Prishtina Insight, Issue 83 (March 2, 2012), p. 21.Available in ShqipJan-Peter OltersCountry ManagerWorld Bank Country Office in KosovoThe... Show More + title page of the World Bank’s recently published Global Economic Prospects shows a sailing ship adrift in impenetrable fog, bereft of a clear view on the dangers ahead. More than storms and heavy seas, sailors fear the disorienting mist, depriving them of certainty, of their ability to assess (and react to) hazards ahead. In these situations, they must rely on their senses, focus on the immediate risks ahead, and take speed out of their journey while retaining the ability of rapid manoeuvres. In essence, the same challenge applies to policymakers, central bankers, firms, and households caught in the Great Fog of Uncertainty that is 2012. The ability to forecast economic developments is hampered by the high degree of insecurity of whether (i) the sovereign debt and competitiveness cr Show Less -

Reinforcing Conditions for Productivity GrowthJan-Peter OltersCountry Manager, World Bank Office in KosovoPublished in: The Horizon (American Chamber of Commerce in Kosovo), February 2012, pp. 12–13.Only... Show More + three years after the financial crisis had brought the world economy to its knees, firms, households, and governments have become pre-occupied—yet again—by the prospect of a global recession. This time, root causes are unsustainable public-debt levels in parts of the eurozone (and the US), leaving investors alarmed, banks unsettled, and households under stress. Economic forecasts for 2012 have been made difficult by the fact that policy responses to mounting financial pressures have remained underwhelming. To varying degrees, countries in the Western Balkans were hit hard by the previous crisis, and they are left struggling in their attempts to regain the fiscal space necessary to cushion harmful socio-economic effects from another downturn. As argued in the World Bank’s recently publi Show Less -

*As published on the Financial Times online on Tuesday, January 24, 2012For almost 60 years, Germans have maintained that it is their responsibility to participate in a modern Europe. Today, Germany’s... Show More + responsibility is to lead in saving that Europe. This shift is not easy for Germans, who have often been urged to step forward, only then to be criticised for aggressiveness. But no other country can lead Europe out of crisis and into revival.Europe has stumbled from one partial solution to another, buying time without solving the interconnected problems of sovereign debt, banks and competitiveness. Germany has recently urged a fiscal pact as part of a renovated European project. Chancellor Angela Merkel knows that while Germans do not want to waste money, they are deeply committed to their European identity and will offer support if presented with an achievable plan.Combined with new governments pushing fiscal discipline and structural reform in Italy and Spain, as well as support Show Less -

The Spring Festival travel season, or chunyun, is back and a total of 3.1 billion trips are expected during the 40-day peak season. It's understandable that for many it is hard to get a train ticket as... Show More + China's railway system not only carries the largest and fastest growing volume of traffic of any major railway in the world, it also is by far the busiest. It carries nearly three times the volume of traffic on an average kilometer of rails as the US rail network, and about 10 times that of the European Union.Despite substantial investment since 1949, China's railway route length compared to its land area is still one-third that of the US and only one-sixth that of the EU. More strikingly, its route length per citizen is less than one-twelfth that of the US and one-seventh that of the EU. No wonder, China's rail network is used so heavily. Indeed, its capacity is effectively rationed on many routes, something that will be readily attested by many passengers waiting for seats and freight Show Less -

From cave drawings to navigational charts to GPS, people have created and used maps to help them define, order and navigate their worlds. Four hundred years ago, in the Age of Exploration, it was cartographers,... Show More + often working alone, who used the stars, mathematics and early attempts to represent longitude to map the New World. Today, in the Age of Participation, it’s crowds, not scholars, who are charting their own New World. A combination of the old art of mapping with the relatively new art of crowdsourcing — the open calls for action via the Web — offers the potential to open up a new path for the developing world: helping citizens map their own country’s facilities and thereby have a greater say in charting the future. Citizen cartographers can be a powerful force. In the aftermath of the Haiti earthquake, rescue workers used real-time data uploads on Open Street Map, via text and cellphone messages, to help create up-to-date maps of Haiti and find the injured. Engineers f Show Less -